MOBILE AUDIO DELIVERY AGREEMENT
THIS AGREEMENT IS MADE THE 13TH DAY OF JULY 1998
BETWEEN
(1) Sycom Technologies, Inc., a company incorporated in the State of New
Jersey, USA situated at 1239 Parkway Avenue, Ewing, New Jersey (hereinafter
referred to as "SYCOM");
and
(2) Audio Highway, Inc., a company incorporated in the State of California
situated at 20600 Mariani Avenue, Cupertino, California (hereinafter
referred to as "AUDIO HIGHWAY").
WHEREAS, AUDIO HIGHWAY desires to generate revenues through the delivery of
audio and other content through their Web Server; and
WHEREAS SYCOM has certain technologies regarding the storage and management of
digital data; and
WHEREAS, AUDIO HIGHWAY desires to utilize SYCOM's technology to enable portable
devices to be capable of receiving, storing and playing content; and
WHEREAS, SYCOM desires to provide to AUDIO HIGHWAY portable devices and chip
sets capable of storing and playing back said content,
THEREFORE, the parties agree as follows:
DEFINITIONS
The following terms shall have the associated meanings as used herein:
"Gross Profits"
Shall mean the gross revenue generated from the delivery of
audio content through the Web Server directly related to a
Product or chipset, it shall not include revenue from banner
ads located on the web site or bounce-back sales. It is
understood that currently AUDIO HIGHWAY's revenue model is
generated by an economic model where advertisers pay $3.00
for every sixty minutes of content delivered to a Product.
If AUDIO HIGWAY changes its revenue model the parties agree
to renegotiate, in good faith, a definition of "Gross
Profit" that does not leave either party worse off than if
the revenue model had remained the same.
"Product"
Shall mean a hand held product capable of downloading
digital audio from a PC, storing the audio in digital format
and playing it back manufactured by Sycom or using a Sycom
Chip Set.
"Chip Set"
An embedded silicon based microelectronic circuit capable of
storing, managing and interpreting digital audio data and
playing it back
"PC Agent"
A software component which resides on a user's personal
computer and interfaces into the Web Server.
"Web Server"
A server package that interfaces with the world wide web or
any other network and serves up digital content onto that
network
TERMS
AUDIO HIGHWAY agrees to pay SYCOM a royalty in the amount of 8% of the ongoing
Gross Profits resulting from the use of Products either manufactured or enabled
by SYCOM's chip sets so long as SYCOM does not supply any competitors of AUDIO
HIGHWAY. Once SYCOM begins to receive revenues from a competitor to AUDIO
HIGHWAY, AUDIO HIGHWAY shall then only be responsible to pay SYCOM a royalty in
the amount of 6% of the ongoing Gross Profits resulting from the use of Products
either manufactured or enabled by SYCOM's chip sets.
AUDIO HIGHWAY agrees to make best efforts to ensure that their Web Server and PC
Agent are capable of interfacing to SYCOM's chip set. SYCOM agrees to make best
efforts to ensure that their chip sets are capable of interfacing to AUDIO
HIGHWAY's Web Server and PC Agent.
SYCOM shall offer to AUDIO HIGHWAY most favorable pricing for Product which,
AUDIO HIGHWAY purchases directly from SYCOM. In addition SYCOM shall not supply
Product to any other internet backend audio providers who would be deemed a
competitor to AUDIO HIGHWAY for a period of one year from the date of this
agreement.
Both parties agree to cooperate fully with the other in matters of joint
development and pursuit of mutually beneficial business opportunities.
DURATION
This agreement shall remain in effect for a period of three (3) years and two
(2) successive two (2) year terms. If this agreement is not cancelled by either
party 30 days prior to the expiration of any term it shall automatically renew
for the next term.
PAYMENTS
In consideration of this agreement as well as other good and valuable
consideration received, AUDIO HIGHWAY agrees to pay SYCOM the $30,775.42
currently due and outstanding on the books of SYCOM within 10 days of signing
this agreement. In addition AUDIO HIGHWAY agrees to pay SYCOM the additional
$15,000 still remaining on the development of the "Listen-Up" Product 45 days
after the product is delivered. There are currently 250 packaged Listen-Up
Players with docking stations, cables and power supplies owed to Audio Highway.
Payments to SYCOM under this agreement will be made quarterly, based upon
revenues collected by AUDIO HIGHWAY or any of its subsidiaries or partners,
during the previous calendar quarter related to devices enabled by SYCOM.
Payment shall be made no more than 15 days beyond the end of each quarter. Late
fees shall be assessed at 1.5% per month. Said penalties shall begin to accrue
on the 15th day of each quarter for overdue payments.
QUARTERLY REPORTS.
Within fifteen (15) days after the end of each calendar quarter, together with
payment, during the Term, commencing with the end of the first calendar quarter,
AUDIO HIGHWAY shall prepare and deliver to SYCOM a quarterly report of actual
Gross Profits in respect of such quarter for all Products and/or customers
subject to this agreement. Each quarterly report shall specify (a) the number
of Products sold by AUDIO HIGHWAY or on behalf of AUDIO HIGHWAY, to said
customers and the number of units in service during such quarter, and (b) the
calculations of the actual Gross Profits in respect to said customers, for such
period and the calculation of the cumulative Gross Revenue from the ending date
of the last such report through the end of such calendar quarter; PROVIDED that
the first quarterly report shall commence on the date of the first firm order
and shall end on the last day of the calendar quarter immediately following such
date. AUDIO HIGHWAY will make a good faith effort to make additional
information available to SYCOM to assist them in their marketing efforts.
AUDIO HIGHWAY BOOKS OF ACCOUNT.
AUDIO HIGHWAY shall keep complete and accurate books of account for
the purpose of showing the amount of each Payment payable to SYCOM.
These books of account shall be kept at AUDIO HIGHWAY's principal
place of business and shall be open at reasonable times during normal
business hours for three (3) years following the end of the calendar
year to which they pertain for inspection or audit by SYCOM at its
expense.
SYCOM'S AUDIT RIGHTS.
SYCOM shall be entitled annually to audit AUDIO HIGHWAY's books of
account solely as they relate to the obligations of AUDIO HIGHWAY
under this Agreement, at SYCOM's expense, with at least two weeks
prior notice to AUDIO HIGHWAY. Any error discovered by SYCOM in the
course of such audit shall be remedied within thirty (30) days by
AUDIO HIGHWAY, if it has underpaid SYCOM and by SYCOM, to the extent
it has been overpaid. In addition if such errors exceed five percent
(5%) then AUDIO HIGHWAY shall bear the cost of the audit and shall pay
a penalty of five percent (5%) of the error. All information received
by SYCOM in the course of any such audit shall be held confidential by
SYCOM and shall not be disclosed to any third party (other than
SYCOM's attorneys and accountants) or used for any purpose whatsoever
other than to determine the accuracy of the payments made hereunder.
TERMINATION
This Agreement may be terminated by either party if an Event of Default occurs
or with 30 days written notice. In the event of Termination, AUDIO HIGHWAY
shall remain liable to SYCOM for payment of monies due in relation to this
Agreement as well as any future Profits from devices enabled by SYCOM. The party
that does not default shall have the right to retain both the obligations as
well as the benefit of this agreement. The Payments clause as well as all
clauses subsequent shall survive the termination of this agreement.
NOTICES
A notice, approval consent or other communication in connection with this
Agreement:
(a) must be given by an authorized representation of the relevant party;
(b) must be in writing; and
(c) must be left at the address of the addressee or sent by prepaid
ordinary or via internationally recognized courier service to the
address of the addressee or sent by facsimile to the facsimile number
of the addressee which is specified in Schedule 1 or if the addressee
notifies another address or facsimile number then to that address or
facsimile number.
A letter or facsimile is taken to be received:
(a) in the case of a posted letter, on the third Business Day after
posting; and
(b) in the case of a facsimile, on the next Business Day following the
transmission of a facsimile; and
(c) in the case of an internationally recognized courier service, on the
second Business Day after the date sent.
ENTIRE AGREEMENT
This Agreement, together with its Annexes, constitutes the entire Agreement
among the parties. It hereby replaces and supersedes all prior agreements
between the party including the "Strategic Alliance Agreement" dated June 1,
1996 and the "Amendment to the Strategic Alliance Agreement" signed on January
6, 1997, specifically SYCOM hereby waives any claims to stock in AUDIO HIGHWAY
as mentioned in said agreement.
This Agreement may only be amended in writing, signed by an authorized
representative of each party. This Agreement supersedes all previous
representations, proposals, and other understanding between the parties relating
hereto.
NO AGENCY
This Agreement shall not be construed as creating an agency, partnership, joint
venture, or other relationship between the parties other than one of independent
contractors.
PROCEDURES IN THE EVENT OF A DISPUTE
(a) In the event of a dispute between or among the parties regarding the
performance of one or more parties under this Agreement, the parties
shall use their good faith efforts to resolve such dispute. If, after
twenty (20) days, the parties are unable to reach agreement despite
their good faith efforts to do so, any party may refer the dispute to
the Senior Executives (as hereinafter defined) for resolution in
accordance with sub-clause (b) below.
(b) Each party shall designate a senior executive officer (a "Senior
Executive") of its company who will be available in the event of any
dispute. The initial Senior Executives shall be Nathan Schulhof, on
behalf of AUDIO HIGHWAY, and Ronald J. Wilkins, on behalf of SYCOM.
The Senior Executives shall attempt in good faith to resolve any issue
presented to them by either party in accordance with sub-clause (a)
above. If the Senior Executives are unable to resolve a disputed
matter within fifteen (15) business days after the referral to them of
a dispute (or such longer period of time as to which the Senior
Executives mutually agree in writing), any party may submit the
dispute to mediation in accordance with sub-clause (c) below.
(c) The dispute shall be submitted to a reputable and experienced
mediation service, located in Denver, Colorado, or such other place as
the parties may agree, that is
mutually acceptable to the Senior Executives, for non-binding
mediation in an attempt to reach a resolution.
(d) With the exception of interim equitable relief, neither party will
institute legal proceedings regarding a bona fide dispute until it has
exercised reasonable good faith efforts to achieve resolution through
the foregoing procedures.
WAIVER
No waiver of any breach of any provision of this Agreement shall constitute
a waiver of any prior, concurrent or subsequent breach of the same or any
other provisions hereof and no waiver shall be effective unless made in
writing and signed by authorized representative of the waving party.
INTERPRETATION
Whenever possible, each provision of this Agreement shall be interpreted so
as to be effective and valid under applicable law, but if any portion of
any provision should be deemed invalid or prohibited by applicable law,
such portion shall not invalidate the remaining provisions of this
Agreement.
GOVERNING LAW, JURISDICTION AND SERVICE OF PROCESS
This Agreement is governed by and construed in accordance with the internal
laws of the State of New Jersey and the United States, without regard to
principles of conflicts of law and without regard to the United Nations
Convention on Contracts for the International Sale of Goods.
EACH PARTY HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND
FEDERAL COURTS SITTING IN THE STATE OF NEW JERSEY AND COUNTY OF MERCER IN
ANY ACTION, SUIT OR PROCEEDING HEREUNDER, HEREBY WAIVING TRIAL BY JURY AND
ANY AND ALL OBJECTION TO VENUE IN ANY AUDIO HIGHWAYION INSTITUTED
HEREUNDER.
Without preventing any other mode of service, any document in an action
(including without limitation, any writ or summons or other originating
process or any third or other party notice) may be served on any party by
being delivered to or left for the party at its Address for service of
notices herein.
IN WITNESS THEREOF, the parties execute this Agreement by their duly authorized
representatives, effective as of the date first above written.
Signed by Mr. Nathan Schulhof as duly
authorized representative for Audio
Highway, Inc. in the presence of:
- ----------------------------------
Signature of witness
- ----------------------------------
Printed name of witness
Signed by Ron Wilkins as duly authorized
representative for Sycom Technologies, Inc.,
in the presence of:
- ----------------------------------
Signature of witness
- ----------------------------------
Printed name of witness
Nathan Schulhof, CEO
/s/ Nathan Schulhof
- -----------------------------------------
By executing this Agreement the signatory
warrants that the signatory is duly
authorized to execute this Agreement on
behalf of Audio Highway Inc.
Ron Wilkins, CEO
/s/ Ron Wilkins
- ----------------------------------
By executing this Agreement the signatory
warrants that the signatory is duly
authorized to execute this Agreement on
behalf of Sycom Technologies, Inc.
Schedule 1
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SYCOM
Sycom Technologies, Inc.
1239 Parkway Avenue
Ewing, NJ 08628
Attn: LEGAL DEPARTMENT
Contract Maintenance
Fax: 609-530-0217
AUDIO HIGHWAY
Audio Highway
20600 Mariani Avenue
Cupertino, California
Attn: LEGAL DEPARTMENT
Contract Maintenance
Fax: 408-255-5591